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bigduckontax
bigduckontax, Accountant
Category: Tax
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I have read how "if structured properly" the acquisition of

Customer Question

I have read how "if structured properly" the acquisition of a forest or woodland may be passed onto heirs tax-free. What is meant by "structured properly"?
Thank you.
Alan Drake
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello,Alan, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. HMRC advice BIM67701 states: 'The occupation of woodlands managed on a commercial basis and with a view to the realisation of profits is wholly outside the scope of Income Tax and Corporation Tax. Thus:profits arising from the occupation of commercial woodlands are not chargeable;no relief is available for losses suffered;capital allowances cannot be claimed on capital expenditure incurred on plant or machinery connected with commercial woodlands;no relief is available for expenditure incurred on the preliminary clearance of woodland or other preparation of land for forestry purposes.The owner of a commercial woodland who lets it in return for a rent is, however, chargeable on the profits arising from a property business.Profits from the sale of trees in commercial woodlands are exempt from Capital Gains Tax, see CG73200 onwards.' The Telegraph gives the following advice regarding the beneficaries of woodlands following a death: 'Forestry qualifies for 100% relief from Inheritance Tax (IHT) once you have owned it for more than 2 years. This includes the value of the land and the trees,” but on the (presumably authoritative) website of HMRC (hmrc.gov.uk) it states that “When you die, the beneficiaries of your woodland can ask that the value of the timber - but not the land - be excluded from your estate. However, when the timber is sold, the beneficiaries may have to pay Inheritance Tax on the value of the sale unless it also qualifies for relief.' The term 'structured properly' refers to the type of woodland with threes in varying stages of production to provide a continuous flow of matured timbe. I do hope that I have shed some light on your question.